There's a new sector in the closely followed S&P 500, and it's off to a good start.
Real estate traded as its own sector within the benchmark for the first time on Monday and rose 0.75 percent. The sector, which is made up of 28 components, was led higher by a 1.8 percent gain in Equinix. Real estate also outperformed financials, the sector it was once part of, which were up 0.71 percent.
JJ Kinahan, chief strategist at TD Ameritrade, said two of the main drivers behind the sector's good start are surprisingly strong homebuilders sentiment and the low market expectations the Fed will raise rates later this week.
"There doesn't seem to be a threat to values, so it continues to be a healthy market," Kinahan said. "It will get tested [in two weeks] when we get the jobs report."
Market expectations that the Fed will raise interest rates on Wednesday were low on Monday after briefly spiking earlier this month. But Lindsey Piegza, chief economist at Stifel Fixed Income, said the odds of a rate hike this month are "well under 20 percent," in her view.
"We're not really looking for the Fed to make any policy change," she said, noting the recent stream of economic data has been mixed.